Large business and organizations often conduct business across various geography regions, products, and enterprises. It is common that a business is divided into one or more business units, products, or departments that are most often handled independently of one another with regard to reporting and accounting. This division has led to development of different systems and methodologies for carrying out the procurement process (buying) and for the accounting for procurement of items or services (paying). Further, when these organizations are merged or consolidated, the number of disparate systems tends to increase, thus requiring high maintenance and overhead costs. In many organizations procurement is still a fragmented, paper-intensive process that involves many forms and many hours of communications between outside and internal parties to achieve the approval cycle. The internal communications requires interaction with different areas of the organization such as accounting, management, lines of business, receiving, and others each having their own process and approval flows.
For any organization the procurement of goods and services is a core business function that is necessary to carry out the operations of the organization. The organizations buy direct goods such as raw materials or components. The organizations also buy goods or services such as travel, consulting, equipment, office supplies that while not directly connected to operations are necessary for the function of the organization.
In the procurement process, to document purchases and establish the rights and obligations of the parties as to the exact nature of the items desired and their respective quantities, prices, and other stipulations, a purchase order (“PO”) is created by the buyer and is sent to the Seller either electronically or on paper. The seller fills the order in accordance with the requirements of the PO and delivers the item to the buyer's designated location. Once received by the buyer an invoice reflecting the amount of monies due and payable in exchange for the items provided. The accounts payable (“A/P”) department of the buyer compares the invoice to the original PO to ensure the purchase was properly authorized and to confirm that the terms on the invoice are consistent with those documented in the PO. Additionally, the invoice is parsed to extract the associated transportation or shipping charges, and any applicable sales taxes into its appropriate expense category for profit and loss (“P/L”) posting. This process exists in some form in virtually all businesses. In large businesses, it is automated significantly through specialized software or an integrated Enterprise Resource Planning (“ERP”) system. When the item that is ordered through the PO system, the item received, and the invoice, are all in agreement this is known as a “three-way match.”
Organizations have different systems and methodologies for handling each element of the three-way match. Some organizations may use a manual system such as paper to order, invoice, or account for receipt of purchases. The manual system is inherently slow and expensive since it requires mailings, manual extraction, and data entry. Other organizations use exclusively automated systems like ERP, Electronic Data Interchange (“EDI”), and Electronic Invoice Presentment and Payment (“EIPP”) for the purchasing, invoicing, and managing of payables. One major obstacle for using these systems is that there is a lack of uniformity as to data format for the electronic files. When incompatibility is encountered organizations will either resort to a manual system for part of the overall process or invest information technology resources into providing a fix. This disparity of compatibility in an organization is an obstacle to data sharing, uniform policies and processes, and integration of procurement system through new acquisitions.
For the reasons stated above, and for other reasons stated below which will become apparent to those skilled in the art upon reading and understanding the present specification, there is a need in the art for an acceleration of the purchasing process, identification of existing inventory to reduce redundant purchasing, detection of unauthorized purchases, determination of purchasing patterns for budgeting and patterns of behavior, and ensuring contract compliance. There is also a need for an improved and quick resolution of line item approval and flagging of exceptional requests.